Suppose a company has a current ratio of 2.5 times and a quick ratio of 1.5 times. If the company‘s current liabilities are $100 million, the amount of inventory is closest to: A. $50 million. B. $100 million. C. $150 million.
Current ratio = Current assets/Current Liabilities = Current assets/ $100 million = 2.5 Therefore, current assets =$250 million Quick ratio = (Current assets - Inventory)/ Current Liabilities = ($250 million - Inventory)/$100 million = 1.5
